Question 1

Independent checks on the performance of others is one of the categories of internal control.These independent checks would include all of the following, except:
A)Reviewing batch totals
B)Reconciliation
C)Comparison of physical assets with records
D)Use of appropriate ID to enter restricted areas

Accepted Answer

Use of appropriate ID to enter restricted areas

Question 2

Which of the following was NOT listed as a procedure to accomplish independent checks?
A)Recalculation of amounts
B)Analysis of reports
C)Review of auditing procedures
D)Reconciliation

Accepted Answer

Review of auditing procedures

Question 3

Which of the following statements is false, related to the authorization of transactions?
A)Every transaction that occurs must be properly authorized in some manner.
B)General authorization is the set of guidelines that allows transactions to be completed as long as they fall within established parameters.
C)It is not possible, nor is it important, to try to ensure that an organization engage only in transactions that are authorized.
D)Specific authorization that explicit approval is needed for that single transaction to be completed.

Accepted Answer

It is not possible, nor is it important, to try to ensure that an organization e n gage only in transactions that are authorized.

Question 4

The category of control activities referred to as segregation of duties requires that certain activities should be the responsibility of different person or department.The three duties that are to be separated are:
A)Authorizing, recording, and paying
B)Recording, custody, and disposition
C)Authorizing, paying, and custody
D)Authorizing, recording, and custody

Accepted Answer

Authorizing, recording, and custody

Question 5

The range of actions that make up the component of internal control referred to as control activities includes each of the following, except:
A)Segregation of duties
B)Risk assessment
C)Independent checks and reconciliations
D)Authorization of transactions

Accepted Answer

Risk assessment

Question 6

The existence of verifiable information about the accuracy of accounting records is called an):
A)Audit trail
B)Internal control
C)Risk assessment
D)Supporting documentation

Accepted Answer

Audit trail

Question 7

The COSO report identified a component of internal control as the policies and procedures that help ensure that management directives are carried out and that management directives are achieved The component is:
A)Control activities
B)Risk assessment
C)Monitoring
D)Information and communication

Accepted Answer

Control activities

Question 8

Which of the following statements related to the COSO report is false?
A)The COSO report provided the standard definition of internal control accepted be the accounting industry.
B)The COSO report is commonly known as the Internal Control Integrated Framework.
C)The COSO report has not been updated since it was issued in 1992.
D)The COSO report was the result of a comprehensive study of interest control.

Accepted Answer

The COSO report has not been updated since it was issued in 1992.

Question 9

The component of internal control, identified in the COSO report, that sets the tone of an organization and includes the consciousness of its employees is:
A)Risk Assessment
B)Control Activities
C)Control Environment
D)Information and Communication

Accepted Answer

Control Environment

Question 10

The control environment component of internal control was identified to have a number of different factors.Which of the following is NOT one of those factors?
A)Management's oversight responsibility, including its philosophy and operating style
B)The identification of sources of risk
C)The integrity and ethical values of the entity's people
D)The attention and direction provided by the board of directors

Accepted Answer

The identification of sources of risk

Question 11

When discussing the security of assets and documents, there are many actions that can be taken.Which of the following would not be related to this category of internal control?
A)Securing the assets and records so that they are not misused or stolen.
B)Limiting access to certain assets to the extent that is practical.
C)Identifying sources of risk and estimating the possibility of that risk.
D)Enacting physical safeguards, such as security cameras, to protect some assets.

Accepted Answer

Identifying sources of risk and estimating the possibility of that risk.

Question 12

The process of risk assessment would include all of the following actions, except:
A)Identify sources of risk, both internal and external
B)Determine the impacts of identified risks
C)Develop and execute an action plan to reduce the impact and probability of identified risks
D)Report the risks to the audit committee

Accepted Answer

Report the risks to the audit committee

Question 13

This activity serves as a method to confirm the accuracy and completeness of data in the accounting system:
A)Compensating control
B)Independent checks
C)Audit trail
D)Supporting documentation

Accepted Answer

Independent checks

Question 14

Which of the following objectives were not identified as necessary to be provided by an effective accounting system?
A)Prepare the appropriate documents
B)Identify all relevant financial events
C)Capture the important data
D)Proper recording and processing of the data

Accepted Answer

Prepare the appropriate documents

Question 15

The approval or endorsement from a responsible person or department of an organization that has been sanctioned by top management is the process of:
A)Securing assets
B)Segregating duties
C)Authorizing transactions
D)Adequate recording

Accepted Answer

Authorizing transactions

Question 16

A good system of internal control includes many types of documentation.Which of the following types of documentation is not part of the adequate records and documents category of internal control?
A)Schedules and analyses of financial information
B)Supporting document for all significant transactions
C)Accounting cycle reports
D)All of the following are types of documentation

Accepted Answer

All of the following are types of documentation

Question 17

All of the following are reasons why it is not possible to eliminate all fraud risks, except
A)Human Error
B)Human Behavior
C)Opportunity
D)May not be cost effective

Accepted Answer

Opportunity

Question 18

If an accounting supervisor were allowed to hire employees, approve the hours worked, prepare the paychecks, and deliver the paychecks, which of the categories of control activities would be violated?
A)Adequate records
B)Segregation of duties
C)Authorization of transactions
D)Independent checks

Accepted Answer

Segregation of duties

Question 19

One of the components of internal control identified by COSO required that management must be considering threats and the potential for risks, and stand ready to respond should these events occur.This component is referred to as:
A)Control Environment
B)Control Activities
C)Risk Assessment
D)Communication

Accepted Answer

Risk Assessment

Question 20

According to the COSO report, there are five different interrelated components of internal control.Which of the following is not one of those five components?
A)Code of Ethics
B)Control Environment
C)Information and Communication
D)Monitoring

Accepted Answer

Code of Ethics

Quiz 3: Fraud, Ethics, and Internal Control

Independent checks on the performance of others is one of the categories of internal control.These independent checks would include all of the following, except:

Which of the following was NOT listed as a procedure to accomplish independent checks?

Which of the following statements is false, related to the authorization of transactions?

The category of control activities referred to as segregation of duties requires that certain activities should be the responsibility of different person or department.The three duties that are to be separated are:

The range of actions that make up the component of internal control referred to as control activities includes each of the following, except:

The existence of verifiable information about the accuracy of accounting records is called an) :

The COSO report identified a component of internal control as the policies and procedures that help ensure that management directives are carried out and that management directives are achieved The component is:

Which of the following statements related to the COSO report is false?

The component of internal control, identified in the COSO report, that sets the tone of an organization and includes the consciousness of its employees is:

The control environment component of internal control was identified to have a number of different factors.Which of the following is NOT one of those factors?

When discussing the security of assets and documents, there are many actions that can be taken.Which of the following would not be related to this category of internal control?

The process of risk assessment would include all of the following actions, except:

This activity serves as a method to confirm the accuracy and completeness of data in the accounting system:

Which of the following objectives were not identified as necessary to be provided by an effective accounting system?

The approval or endorsement from a responsible person or department of an organization that has been sanctioned by top management is the process of:

A good system of internal control includes many types of documentation.Which of the following types of documentation is not part of the adequate records and documents category of internal control?

All of the following are reasons why it is not possible to eliminate all fraud risks, except

If an accounting supervisor were allowed to hire employees, approve the hours worked, prepare the paychecks, and deliver the paychecks, which of the categories of control activities would be violated?

One of the components of internal control identified by COSO required that management must be considering threats and the potential for risks, and stand ready to respond should these events occur.This component is referred to as:

According to the COSO report, there are five different interrelated components of internal control.Which of the following is not one of those five components?